In a major relief for the mobile handset industry the Kerala government has decided not to levy high VAT rates on mobile chargers/ adapters when packed with mobile phones.

Welcoming the decision, Pankaj Mohindroo, National President of the Indian Cellular Association, said the confusion arose following the Supreme Court’s order while delivering a judgment in the State of Punjab Vs Nokia case clarifying that the mobile adapter/ charger is an accessory to the mobile phone and not a part of the mobile phone. Subsequently, the trade and industry in Kerala was passing through a difficult phase, he said.

“We are sure that this bold move of the Kerala government, which remains in perfect alignment with globally prevalent best practices, would enhance ease of doing business for the industry and would promote the growth of trade and industry in the State in the days to come,” he added.

Mohindroo further highlighted that the Customs (Accessory Conditions) Rule, 1963 specifically provides that accessories packed with an article attract the same rate of duty as the main item when they are compulsorily supplied free.

The Department of Revenue has advised state governments to adopt the Customs Rule for VAT taxation so that a uniform practice is followed throughout the country. However, states are yet to formally adopt these rules. Many of them are aligning their Accessories Rules with the Central law. The lack of a uniform rule is affecting the free movement of goods in the country, he said.

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